What is a 3PL?

Let’s face it, shipping times and delivery expectations are just an average element of being a consumer these days. Gone are the days of heading to the same three stores to purchase goods, with the amount of online ecommerce spaces and retailers, endless options are now at our fingertips. In 2020 alone, there was a 5% gain in ecommerce penetration, the largest year-by-year jump in U.S retail sales that’s ever been recorded. Better yet, this is only forecasted to grow, with online businesses and ecommerce spaces a welcomed new normal for consumers. 

As an ecommerce company or business owner, supply chain management is a natural element of making sure that customers are happy with your services. Especially in the era of expected two-day shipping, having a firm grasp of inventory, warehousing, transportation, and the order fulfillment needed to see profit gains is a crucial element of building a brand and encouraging growth over time. Luckily, third-party logistics (3PL) providers such as ShipCalm are the answer to these supply chain needs. 3PL companies understand the full scope of shipping services and can quickly identify what your business needs in order to streamline services and increase efficiency across the board. We’ll explore 3PL services, as well as:

What Services Does a 3PL Provide

Whether it’s a brick-and-mortar location or an ecommerce business, 3PL companies provide numerous services to businesses looking to expand and streamline their shipping processes. As a 3PL’s customer, businesses are able to outsource their supply chain management to a 3PL company, saving the business owner countless time and resources that could have been dedicated to alternate business growth efforts. Most 3PL companies will provide four major services, which include:

  • Product Procurement
  • Order Fulfillment
  • Warehousing
  • Distribution

Product Procurement

Product procurement is the process of exploring, selecting, and acquiring services or goods from a third-party vendor. This can be accomplished with a direct purchase but also may be negotiated or bidded on, for the sake of ensuring that products are provided to the supplier in good condition at the correct quantity. The process of ordering and receiving goods from manufacturers and suppliers needs to be calculated in order to ensure items are chosen correctly. When a 3PL service handles product procurement, they will typically:

  • Offer inventory management for the 3PL customer
  • Evaluate stock levels and flag when levels are low
  • Place orders with manufacturers to maintain stock levels
  • Coordinate the transport of goods from supplier, to manufacturer, and finally to the 3PL fulfillment center
  • Coordinate and verify receipt of goods into the 3PL location
  • Manage inventory storage until goods are ordered and shipped

Order Fulfillment

Order fulfillment entails exactly what it sounds like, the process of processing orders and ensuring products and services are available and properly shipped to customers. Order fulfillment processes can be time-consuming, so being able to have a 3PL company that’s already equipped with the resources to satisfy order fulfillment needs can provide peace of mind. Product procurement and order fulfillment are interconnected, so both will require a 3PL service’s inventory management ability. When coordinating order fulfillment, a 3PL service will:

  • Handle customer orders for goods and services
  • Manage inventory and adjust stock levels after orders have been placed
  • Select requested goods from the storage facility 
  • Package the requested item with best shipping practices in mind
  • Coordinate loading and distribution processes to ensure item arrives to the destination correctly

Warehousing

As a business owner looking to sell products and goods effectively, proper warehousing is a key element of that success. Storing products for fulfillment and having items readily available for shipment is an important element of any business’ customer satisfaction. Especially as we continue to see an increase in ecommerce spaces, no one loves learning that their cart has changed because an item is out of stock. Having the proper warehousing accommodations for your business’ unique needs is important, and a 3PL service can make sure that not only are items properly warehoused, but they are warehoused in conditions that your goods require for quality assurance. When a 3PL service offers to warehouse goods, they will typically:

  • Provide warehousing that accommodates the demand and capacity of a business’ inventory
  • Ensure that storage areas are suitable for the products being stored, such as food items or harmful chemicals that need to be especially accomodated
  • Offer contract warehousing for those looking to warehouse for a specific duration of time
  • Provide security for all sensitive inventory
  • Manage inventory and perform routine audits to ensure stock levels are adequate and goods are being distributed accurately 
  • Offer in-house tracking for business owners to gain off-site identification of product inventory

Distribution

Naturally, the last step of supply chain management is the distribution of goods to other sections of the supply chain or to the business’ customers. This stage is where a 3PL company can truly come in handy, as shipping requirements, customs clearance, and transit fees can get pretty technical and time consuming. ShipCalm specializes in distribution processes, as one of the most popular options chosen by businesses wishing to take advantage of our fulfillment services. To get an idea of what this entails, ShipCalm is able to:

  • Distribute goods to customers or other stations of the supply chain
  • Provide multiple options for distribution methods (in correlation to the shipping amount and requirements)
  • Consolidate goods
  • Track shipments of goods using tracking software
  • Optimize shipping processes

Benefits of Choosing a 3PL

Now that we understand what a typical 3PL service is able to provide, let’s dive into the benefits of 3PL companies and why they can increase efficiency in a business’ profits and customer service.

  • Access to Expertise – Every business starts out differently, with unique challenges in regards to getting products to consumers. 3PL companies work with a variety of businesses and industries and have the knowledge and expertise to identify areas in which a business could improve its shipping logistics.   
  • Free Up Capital – Any successful business owner understands that having access to capital is crucial for having an accurate idea of profit gains and overall growth. 3PL companies can easily identify where money can be saved and will ensure product fulfillment processes are as cost effective as possible. This lets businesses worry less about product fulfillment and spend more time focusing on customer satisfaction. 
  • Increase Scalability – Especially for small or ecommerce businesses, long term growth is always the goal. 3PL companies are able to help businesses scale much faster by streamlining their shipping process, in turn allowing businesses to expand and further build their brand. 
  • Customer Experience – We’ve only scratched the surface of what a 3PL can offer, with reverse logistics also available which can take some stress off the business owner’s hands. Many 3PL companies like ShipCalm will have customer support services available to provide additional resources for consumers to ensure they’re happy and satisfied with their goods.

How to Choose a 3PL

When choosing a 3PL,  there will be a few different factors to keep in mind in order to guarantee that order fulfillment for your business continues to run effectively. The most important questions to consider when choosing a 3PL are the location of fulfillment centers and technology in use to support these systems. For example, ShipCalm has two centers in Carlsbad, CA and Plainfield, IN, providing two options spread across the country for businesses to optimize shipping processes. Having numerous fulfillment centers is a great way to save money on shipping and expand business services. Regarding technology, 3PL customers need to evaluate their current software in use and make sure that integration with the 3PL company’s software will be possible and that they’ll have access to the data needed to identify shipping solutions. 

When to Use a 3PL

When growing a business, there will always be challenges that create obstacles for success that require business owners to find solutions. Especially for businesses that are first starting to see an increase in sales, this exciting progress can also provide even more problems if inventory management and order fulfillment processes are not streamlined. This is when operational costs climb and businesses tend to scramble to accommodate order requests, a task that a 3PL service is well equipped to accomplish. Some of the most common obstacles that businesses struggle with that can be solved by choosing a 3PL service to stepping up to the plate include:

  • Increased Customer Complaints
  • Business Expansion to a New Region
  • Inventory Control Issues
  • Needing to Reduce Shipping Risks

ShipCalm Can Be Your Third-Party Logistics Provider

With an increased understanding of what a 3PL is, business owners can educatedly choose a 3PL service that fits their operational needs. ShipCalm is a reputable 3PL company with extensive experience servicing companies looking to optimize their shipping services and product fulfillment. With ShipCalm’s industry knowledge and expertise, the stress surrounding shipping logistics becomes history. Our fulfillment services detail what ShipCalm can offer your business, from inventory management to customer service. Get in touch with a ShipCalm representative to see if a 3PL company is a good fit for your business and request a quote today!